Sunday, December 29, 2013

I'm a swing voter. At various times, I have voted Conservative, Liberal, NDP, and Green. We swing voters keep politicians on their toes, competing with each other to serve the public interest (or at least to present themselves that way). No party can take our votes for granted.

So I had never joined a political party in my life. Until this year. Why the change?

Democratic competition is essential for making elected leaders accountable to voters. But even though our political systems feature electoral competition, that doesn't seem effective enough to keep our leaders and governments loyal to the public interest. Corruption of varying degrees seems pervasive and persistent, from the Liberals' sponsorship scandal ten years ago to the Conservatives' senate expenses scandal now.

Solving this problem has been my main occupation for the past 17 years, focusing first on corporations (where shareowners elect directors), then broadening to include democracies. As a financial economist, my main contribution is to design a system for voters to pay information providers (such as journalists), creating stronger incentives for journalists to serve the interests of a voter community. Successful tests of this system are reported in the paper Experiments in Voter Funded Media.

Designing a solution is one thing. Getting it implemented is quite another. Those in power are naturally reluctant to shift power from themselves to voters (which is what happens when voters become better informed). So it is difficult to change the system from the outside.

When a friend whom I respect asked me to help him run for election as a Liberal member of Canada's parliament, I soon agreed to do so, but did not commit to any specific type of help. It was only later, as I tried to understand the current dynamics of Canadian federal politics, that I saw a potential alignment of my public interest reform work with joining the Liberal Party of Canada (LPC) myself.

To regain Canadian voters' trust after the sponsorship scandal, the LPC needs to show they (we) are serious about reducing corruption and strengthening accountability. We also need to propose some innovative policy ideas to distinguish ourselves from the other parties (e.g. see this perspective in the Globe & Mail). A new internet-based voter information and engagement strategy could help fulfill these needs.

There are other reasons why the centrist LPC may fit my political orientation better than other parties. I was fortunate to grow up in a home where both my parents cared about politics and public policy. Best of all was their wide range of views, since Mom was NDP while Dad was Conservative. (And they stayed married for life!) I learned to appreciate that there are intelligent people in all our major political parties who are sincerely trying to serve the public interest. I see them all as colleagues in that endeavour.

The issue of democratic accountability can appeal to voters across the political spectrum. A centrist party may be in the best position to attract swing voters from other parties by taking the lead on such an issue.

Of course, voters and party members must try to ensure that an elected party actually delivers on its campaign platform. Backsliding has long been the norm:

"As soon as the new leaders have attained their ends, as soon as they have succeeded (in the name of the injured rights of the anonymous masses) in overthrowing the odious tyranny of their predecessors and in attaining to power in their turn, we see them undergo a transformation which renders them in every respect similar to the dethroned tyrants. Such metamorphoses as these are plainly recorded throughout history." (Michels [1911] p. 114)

"Therefore in addition to supporting challengers, it is even more important to change a co-op's rules in ways that strengthen a competitive democracy, and reduce the entrenchment of the current leaders. Ideally, we members would like to elect directors that will help implement such reforms. So we should push candidates toward platforms that include reform, and hold them accountable to their promises."

As Lawrence Lessig said eloquently in his February 2013 TED talk (about 11 minutes in): It's not that democratic reform is the most important issue. But it's the first issue -- the one we need to solve in order to solve the more important issues like environmental policy. Although money-driven corruption is not as bad in Canada as in the USA, the power of well-funded narrow interests to misinform voters and influence politicians is a big problem here too.

BTW Canadians get tax credits for federal political donations. Your first $400 donated per calendar year only costs you $100. You can do this once by December 31, and then again in January -- donate to LPC at liberal.ca/donate or call (888) 542-3725.

Resolution 4: Create an option to use alternative voting systems in elections

Resolution 5: Permit the co-op to pay interest on members’ shares

Resolution 6: Permit an organization to become a Business Member of the co-op, and to appoint a Delegate to represent it

Resolution 7: Authorize the Board to invest funds with reference to an Investment Policy

Resolution 8: Change the name of the co-op to Modo Co-operative

Brief Summary of Meeting:

We passed each of the 8 resolutions by more than the required 2/3 super-majority vote.

On Resolution 7, I proposed an amendment to require a member approval vote on future changes to the Investment Policy. Amendments are decided by simple majority vote. With 14 in favour and 15 opposed, we did not adopt my amendment. We then unanimously approved the Board's original Resolution 7.

There was significant opposition to Resolution 6 (letting businesses that use Modo become voting members of Modo), but it passed by a vote of 25 in favour, 7 opposed.

There is not enough voter engagement, nor enough sources of insightful assessments of the candidates. (There should be much more insight available than my blog post above, but if it's out there I can't find it.)

I have been recommending various improvements to CIRA, so instead of repeating them I'll link to them:

Friday, September 13, 2013

Two weeks ago I blogged about the upcoming (Sept 23) Special General Meeting of Modo the Car Co-op, to vote on the Modo Board's proposed rule changes. I supported Resolution 2 (to create a nominations committee) and Resolution 3 (to enable voting via internet) as changes that would strengthen member democracy.

Recently I studied Resolution 7, which would authorize the Board to invest Modo funds with reference to an investment policy. It would change the existing Rule 10.02:

"Without the approval of the Members by special resolution, the Directors shall not invest a total of more than $25,000 of the funds of the Association in securities or classes of securities other than those in which trustees are permitted to invest trust funds under the Trustee Act."

To become:

"The funds of the Association shall be invested in accordance with an Investment Policy approved by the Directors that defines permitted investments and sets investment limits for permitted investments." [emphasis added]

To maintain democratic accountability to us Modo members on how our accumulated funds are invested, I recommend changing the word "Directors" to "Members" in the above proposed new rule. [Update 2013-09-20: amended wording in second comment below] So the Board could propose future changes to the investment policy, but those changes would need to be approved by a vote of the members.

Resolution 4: Create an option to use alternative voting systems in elections

C. OTHER SUBSTANTIVE CHANGES

Resolution 5: Permit the co-op to pay interest on members’ shares

Resolution 6: Permit an organization to become a Business Member of the co-op, and to appoint a Delegate to represent it

Resolution 7: Authorize the Board to invest funds with reference to an Investment Policy

Resolution 8: Change the name of the co-op to Modo Co-operative

Full details (text of new rules, reasons etc) are accessible only to Modo members (like me) logged in at bookit.modo.coop.

As you can see from my posts on this blog for the past year and a half, I've been very critical of the boards of some large co-ops, which have persuaded their members to approve rule changes that shift power from members to the board. The boards have not described it to members as a power transfer, but in substance that's what it is. The changes undermine Co-operative Principle #2 -- democratic member control -- and open the door to corrupt abuse of power by boards. Mountain Equipment Co-op (MEC) is a prime example.

So I'm happy to report that, as far as I can tell, the rule changes proposed by Modo's board would strengthen, not weaken, member democracy.

Friday, May 10, 2013

Today I submitted this letter to the B.C. Financial Institutions Commission (FICOM), with my comments on their draft Governance Guideline for Credit Unions. Main points:

Accountability requires competition in board elections.
=> So boards should not be able to disqualify competitors based on subjective assessments.

Lack of accountability opens the door to corruption.
=> Only competitive elections can prevent favouritism in the use of members' funds.

Board control of information can bias elections.
=> Boards should not be allowed to put their recommendations on board election ballots.
=> Without that, Vancity members would have elected Lisa Barrett instead of Allen Garr.

Please don't let the foxes design the hen house.
=> The public interest should take precedence over lobbying by credit union insiders.

Will next week's B.C. election have any effect on FICOM's final Governance Guideline? Just asking...

Saturday, May 4, 2013

At the Coast Capital Savings Credit Union's Annual General Meeting of members on April 30, it was announced that members had voted over 79% to take back control of directors' pay. The board had recommended voting "NO", so members have learned to be skeptical of board recommendations. Two recent write-ups on this:

Saturday, April 27, 2013

Mountain Equipment Corporation Cooperative held its 2013 Annual General Meeting on April 25. Unfortunately, the outreach efforts of us 600 MEC Members for a Democratic Co-op were not enough to counter the MEC board's control of information flowing to members. The board's resolution on rule changes passed by a vote of 91% to 9%. For an overview of how the vote was biased, see my article in the Vancouver Observer: "We want our co-ops back"

So in addition to last year's new power to reject director candidates from standing for election, the board can now reject any member resolution for any reason, without submitting it to member vote. The new rule changes reduce the board's accountability to members in several other ways detailed in my March 14 blog post.

Many members were shocked to see how quickly the board took advantage of its new power by rejecting 2013 director election nominee Anders Ourom. His qualifications include:

MEC Director (1981-1986, 1988-1992)

MEC Board Chair (1989-1991)

President, Climbers' Access Society of B.C. (1995-2004)

Lawyer, Advising Societies and Co-operatives (1995 - present)

Legal Advisor, MEC Rules Revision Projects (1997-1998, 2001-2002)

Apparently the board decided that MEC members needed to be benevolently protected from having the option to vote for Anders this year. In the AGM's Reports Q&A section, I stepped up to the mike and asked this question:

Reclaiming member democracy in co-ops and credit unions can be a first step toward making our elected leaders accountable to voters in corporations and democracies too -- see recent Vancouver Observer article "We want out co-ops back."

Saturday, April 6, 2013

A dominant majority of the Vancity board are using their control of information flowing to Vancity members, to tighten their grip on power over the credit union. Taking advantage of voters who are too busy to search for other info sources, the controlling group ensures that their recommendations are the only info conveniently available to members. I have documented this in a series of posts since April 2012 -- see votermedia.blogspot.ca/search/label/Vancity

Notably this year, one of the board's "recommended" candidates -- Bob Williams -- is not a member of the controlling majority (details in this report, from page 8). So I plan to vote for him. Challengers to the dominant group can help improve democratic competition and thus accountability to members.

In a similar push-back, 438 members of Coast Capital Savings Credit Union (a financial co-op) have signed a petition demanding a vote to reverse a 2007 rule change that allowed their directors to decide their own pay, which has grown rapidly since then -- see the member-organized website Coast Capital Compensation Watch. Members can vote on the resolution from now through April 16, on paper ballots by mail or online at www.coastcapitalsavings.com > Log in > Account Services > Online Voting. (Please vote YES.)

Technology Credit Union:

Last year, the board of California's Tech CU proposed converting it into a mutual savings bank, a move that has been criticized (e.g. here) as enriching directors at members' expense. Fortunately, a campaign to alert members to the downside resulted in their defeating the proposal by a 77% vote.

Last year I wrote a report proposing reforms for these democratic deficits, and emailed it to the boards of MEC and Vancity. But judging from our resulting correspondence, they seem unwilling to restore accountability to members.

So more members are getting concerned about the trend, and seeking to reverse it. Last week I published an article in the Vancouver Observer, citing the decline in accountability of elected leaders as a major cause of the 2008 financial crisis. Co-ops can become the starting point for a democratic reform movement that can eventually empower us to also reclaim our corporations and our governments.

We are organizing -- please email me (mark[at]votermedia.org) to join us in re-establishing Co-op Principle #2 -- Democratic Member Control:

"Co-operatives are democratic organizations controlled by their members, who actively participate in setting their policies and making decisions. Men and women serving as elected representatives are accountable to the membership."

It describes how the boards of Mountain Equipment Co-op and Coast Capital Savings have been changing the rules in ways that shift power from members to boards. This undermines the accountability of elected leaders to voters -- the same trend that caused our 2008 financial crisis.

[BTW the above linked article is a 2-page overview, partly based on my 24-page in-depth report with the same title but capitalized: "We Want Our Co-ops Back". Sorry for any confusion but I love that title!]

Tuesday, March 12, 2013

Last year, I studied the trend toward violating the second fundamental principle of co-operatives -- democratic member control -- as co-ops become large. As examples, I focused on three organizations: Mountain Equipment Co-op (MEC), Vancity Credit Union, and the Canadian Internet Registration Authority. (CIRA, which manages the .ca domain, is not formally a co-op but faces similar issues of accountability.)

I wrote a detailed exposé of how these organizations' boards have been changing the rules in ways that shift power to themselves by reducing their accountability to members, while maintaining a facade of democracy -- see We Want Our Co-ops Back at votermedia.org/publications. Last September I announced the first draft on this blog and on Twitter, and emailed it to all three boards, inviting feedback. Here I'll report how they have responded so far.

To make it easier for them to give at least a partial response in the near term, in December I suggested that they focus on just two practical reform questions:

1. Do you plan to create a year-round online member forum?2. Do you plan to create a competition for informing members, in which members vote to allocate award funds?For both these questions: If so, when? If not, why not?

Wednesday, February 20, 2013

Over 400 members of Coast Capital Savings credit union have sent petitions to require a member vote, on a resolution to regain control of director compensation. Ballots will be sent to all members on March 21, with voting from March 22 to April 16, 2013.

Congrats and thanks to Phil Embley for alerting and mobilizing Coast Capital members!

This is the latest event in a broad trend of elected leaders reducing their accountability to voters, and voters pushing back to increase accountability. See "We Want Our Co-ops Back" at votermedia.org/publications for developments at Vancity Credit Union and Mountain Equipment Co-op. Also my earlier post Tech Credit Union members' revolution.